Annual report 2018 Cultura Sparebank Annual report 2018
Our loan customers on the front page (from left to right): Hugo Vink making cheese on Lofoten Gårdsysteri (photo: Scott Gilmour); green housing on Nesodden (photo: Alan Coulsen); Oslo Fjordsauna (photo: Adrrian Bugge); the 2 cheese Steinfjording from Lofoten Gårdsysteri that was awarded “Spesialitet- merket” in 2018 (photo: Solveig Rist Gilmour). Cultura Sparebank Annual report 2018
Table of Contents
TABLE OF CONTENTS ...... 3
VALUE-BASED BANKING ...... 4
THE BOARD OF DIRECTORS’ REPORT FOR THE YEAR 2018 ...... 7 Main Guidelines for Business Activities ...... 7 Organization ...... 8 Risk Management ...... 8 Environment and Other Conditions ...... 10 Economy ...... 12 Marketing and Communication ...... 15 Other Matters and Outlook for the Future ...... 18 Expression of Gratitude ...... 18 Profit and Loss Statement ...... 19 Balance Sheet as of 31.12.2018 ...... 20
NOTES TO THE ACCOUNTS ...... 22 1. General Accounting Principles ...... 22 2. Loans and Guarantees ...... 22 3. Interest Bearing Securities, Certificates, Shares and Other Interests. 27 4. Fixed Assets and Intangible Assets ...... 28 5. Capital ...... 30 6. Liquidity, Financing and Interest Expense ...... 34 7. Information Concerning Employees and Elected Representatives .... 36 8. Taxes ...... 38 9. Various Other Information ...... 39
AUDIT REPORT ...... 41
AUDIT REPORT TRANSLATION ...... 43
EMPLOYEES AND ELECTED REPRESENTATIVES 2018 ...... 46
KEY FIGURES ...... 47
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Cultura Sparebank Annual report 2018
Value-based Banking Gro Harlem Brundtland, Norway’s prime minister who served several terms, is generally recognized as the creator of the concept of sus- tainable development. In 1983 she was appointed to establish and chair the UN’s World Commission on Environment and Develop- ment. It was in the Commission's final report of 1987, "Our Common Future", that the concept of sustainable development was intro- duced and emphasized. In other words, the concept has been com- monly used for more than 30 years. After some years, many thought the concept of sustainability had become exhausted.
During the past few years, however, the concept of sustainability has made a comeback. First and foremost, it is about a significant impact on the understanding that man-made climate change is a global Kjell Fredrik Løvold, CEO, general manager problem. The fact that human activity contributes to an increase in the atmospheric content of CO2, which leads to catastrophic climate change, can now be regarded as common knowledge. It is interesting then to note that CO2 and climate change were mentioned but not particularly highlighted in the report, "Our Common Future" from 1987. The UN Intergovernmen- tal Panel on Climate Change was established the year after the report was presented, but confer- ences and agreements to limit emissions of greenhouse gases lay many years into the future.
The novelty in the report “Our Common Future” was, in particular, that the focus on overuse of the planet’s natural resources was not linked to a criticism of the objective of economic growth. The fact that overuse of natural resources is a serious problem and, of course, primarily in the wealthy na- tions, had already been highlighted in the so-called Roma Club Report of 1972. That report bore the title "Limits to Growth", and pointed to exponential economic growth as the fundamental problem. "Our Common Future", on the other hand, claims that economic growth can and should be contin- ued only if it is promoted in the right, sustainable way. Economic growth is also emphasized by Brundtland as crucial in increasing prosperity in the world's poorest countries. Sustainable develop- ment was characterized by increased prosperity, but without overuse of energy resources and with- out harmful pollution of water, soil and air. People's potential impact on climate change was a new issue, which for a long time was not necessarily dealt with under the concept of sustainability.
In 2019, we can observe that climate change is at the top of the agenda when sustainability is to be discussed. Seen in this way, a significant political change has taken place since 1987.
Some will argue that the climate issue has emerged at the expense of the further perspective from 1987. Many researchers will argue that the loss of biodiversity as a result of pollution and interven- tion in nature is a strongly under-communicated problem, and that it easily drowns in a more one- sided climate perspective. It is often shown that the loss of biodiversity, such as a proven extensive insect death, is potentially catastrophic for nature's production ability, and thus for human life condi- tions. Plastic pollution has lately, and quite abruptly, received a lot of media attention. This is a more classic littering problem, which has far greater consequences than we have been aware of recently. The increasing plastic pollution can be very clearly linked to great global economic growth. Plastic has
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Cultura Sparebank Annual report 2018
become a necessary part of an infinite number of products and manufacturing processes. Neverthe- less, the premise of "Our Common Future" is that economic growth can be sustainably maintained. However, the premise of the report "Limits to Growth", that boundless economic growth cannot be pursued, cannot be said to have received the same renaissance. Regarding social development, "Our Common Future" assumes that continued economic growth was necessary for the sake of the world's poor. The development after 1987 has also led to hundreds of millions of people coming out of abso- lute poverty in emerging economies such as China, India and Brazil. At the same time, however, the skewed distribution of wealth has increased significantly, so that the social challenges that arise from major economic dif- ferences have increased. Mean- while, it is also the case that large groups, such as the middle class in the US, have had negative real wage developments over the past 20 years. There may be rea- son to assume that this affects the ability to achieve approval of political messages where the need for economic moderation is highlighted.
The new sustainability move- ment is reflected in a large num- ber of initiatives. I find it appro- priate to mention our industry organization FNO's (Finance Norway) roadmap for a sustaina- ble financial industry. This docu- ment was prepared after several workshops where FNO's mem- bers, including Cultura Bank, Once again Cultura Bank achieved first place in the Ethical Banking Guide, participated. The document has which is a survey in which Framtiden i våre hender and Forbrukerrådet have been shared with both the envi- reviewed Norwegian banks’ ethical guidelines, requirements and policy ronmental and finance minister. documents regarding social responsibility, ethics and the environment. Out in the big world, the UN's 17 sustainability goals have been developed. These have received great attention both in business and in civil society. Educational institutions, not only within technology subjects, but also economics, law and social sciences, incorporate the sustainability perspective into their curricula and research pro- grams. A large number of seminars and conferences are arranged for discussion and illumination of the issue. The emergence of a new movement of sustainability is evident. Cultura Sparebank has had sustainability listed in its mission statement since the bank's first day in 1997. In other words, for Cultura, sustainability means "business as usual", more than an abrupt change. That is to say, "as
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Cultura Sparebank Annual report 2018
usual", does not exactly describe Cultura’s business either. The bank is a small player in the banking industry, and is effected by what is happening in its surroundings. Competition in the "sustainability market" is increasing significantly. This means that Cultura will also notice harder business competi- tion, which inspires increased efforts. At the same time, the bank will be a vigilant defender of the concept of sustainability. There will always be a danger that sustainability will result in 'green wash- ing'. But we cannot allow ourselves to make sustainability something secondary, something we think of after making money. Sustainability must be considered before and while making money. Financial profit is not synonymous with sustainability, but sustainability also does not prevent financial profit, rather the opposite. If we succeed in safeguarding the sustainability of our banking activities, we contribute to a better environment and better social conditions for our fellow human beings and ourselves. We at Cultura Bank are confident that it is possible to succeed at this.
Economic Status
Cultura’s result after losses and taxes in 2018 is NOK 5 477 000. This is an improvement of NOK 2 415 000, compared to 2017. Total assets as of 31.12.2018 were NOK 1 066 368 000, which implies a percentage increase equal to that achieved in 2017. The bank aims to continue to increase growth, combined with a reduced cost percentage, improved profitability, and a higher dividend yield. The total capital ratio and Tier 2 capital ratio as of 31.12.2018 are 22,52 %, while Tier 1 capital is at 19,25 %. Both the authorities’ required levels and our internal requirements are met with a good margin. Cultura will pay out a dividend of 3,0 % to the equity certificate owners based on the result of 2018. This equals a payout ratio of 41 % which corresponds with the bank’s objective, within a 50 % payout ratio, of being able to pay a moderate dividend on equity certificates. This will in the foreseeable future be a very significant part of the bank’s risk capital. Cultura Bank has also seen a large influx of new customers in 2018. The prospect for 2019 is growth and maintenance of good solvency, while the bank will have an increased focus on relative cost reductions and improved oper- ating profit.
Kjell Fredrik Løvold
CEO, General Manager
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Cultura Sparebank Annual report 2018
The Board of Directors’ Report for the Year 2018 Main Guidelines for Business Activities Cultura Bank’s core values are embodied in the bylaws mission statement, and do not change from year to year. The bank’s task is to properly cover the real needs of people. In order to realize this, Cultura Bank engages in international networks. In addition to a longstanding cooperation with Ekobanken in Sweden and Merkur Bank in Denmark, Cultura also participates in the international network Global Alliance for Banking on Values (GABV), who celebrated their 10-year anniversary in 2019. In connection with GABV, Cultura also participates - and utilizes the offer of – education and experience exchanges at the Institute for Social Banking (ISB), which is located in Berlin. ISB’s annual Summer School and its many “Expert Labs” are important arenas for Cultura’s employees.
Cultura Bank aims to contribute to a sound economical and societal development. The bank’s opera- tions must be solid and sound, also in a conventional economic sense, as a prerequisite for realizing its overall goals.
The main principles guiding the bank’s activities may be expressed as:
Sustainability Cultura emphasizes the social and environmental impact of the project in its lending operations. This precedes a conventional assessment of the project’s profitability and security, which Cultura also makes in line with other banks. The assessment of the loan application reveals whether the projects will have environmental, social and/or cultural qualities. Only when such criteria are met, is an assessment then made as to whether the project is expected to be conventionally economically sustainable. The quality requirements must be fulfilled both in terms of social con- tributions and individual finances. In GABV this is expressed as the requirement for a triple bot- tom line: People, Planet and Prosperity.
Transparency Following the borrowers’ consent, the bank will publish a comprehensive review of all loan pro- jects. This enables depositors to see where their money is invested. The transparency principle is also pertaining to the bank’s governance and daily operations. This principle is also a baseline in the international network GABV, where the bank is an active participant.
Consciousness A main pillar of the bank’s mission statement is to contribute to increased understanding about money and economical questions. This is done through articles and reports in the bank’s maga- zine “Pengevirke”, active use of the bank’s website, and its profile on Facebook and Twitter. Representatives of Cultura Bank are also regularly active in various forums, with content about banking and economics.
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Cultura Sparebank Annual report 2018
Organization Cultura Bank is organized in accordance with the Financial Institution Act and the bank’s bylaws. The bank names its supreme body the Board of Trustees, which is composed of representatives of the customers, the owners of the bank’s equity certificates, as well as employees and the local govern- ment. The Board of Trustees normally conducts two meetings a year. They choose a chair for the board themselves among their 12 members.
The tasks of the Board of Trustees are, among other things, to approve the bank’s annual accounts, elect a board, and nominate an election committee. The Board elects an audit and risk committee among its members.
The bank has 16 permanent employees, who together fill 15 full time positions. As of 31.12.2018 there are no temporary employees. The Board, existing of 5 members and 2 deputy members chosen by the Board of Trustees, and one deputy member chosen by the employees, have had 14 meetings in 2018.
The bank’s headquarters and sole office is located at Holbergs gate 1 in Oslo.
Remuneration The remuneration schemes in Cultura Bank are designed in accordance with the Financial Institution Act. The guidelines for remuneration are revised annually by the Board. The Board is also presented with an annual report by the bank manager, with a review of the remuneration scheme. With the exception of remuneration for overtime, no form of variable remuneration is paid based on results obtained, or for any other reason.
Risk Management Good risk management is an important prerequisite for the bank’s operations.
Through its operations, the bank is exposed to a number of risk areas. There are separate policy documents for credit risk, liquidity risk, market risk, operational risk, IT risk and business and risk management. All documents have been subject to review by the Board in 2018, besides the policy document for IT risk, which is being prepared as of 31.12.2018. The bank has established a risk con- trol role that is directly subject to the General Manager, and reports directly to the Board. A separate routine has been established for the implementation of internal control. The internal control report is reviewed annually by the Board. The Board has also established a risk and audit committee.
Credit Risk Credit risk is defined as the risk that customers' payment obligations to the bank cannot be met due to the inability or unwillingness of the customers to pay at the agreed time. This is the most im- portant risk area in a bank, and the bank's risk management policy is therefore organized to ensure that transactions with customers and financial institutions are always within the agreed guidelines.
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Cultura Sparebank Annual report 2018
According to the bank's objective clause and the Board's policy, lending should be within defined lending purposes and have an appropriate spread. The bank carries out a risk classification of all loans based on criteria for payment ability and security. Empirical data for losses and defaults and developments in the risk classification form the basis for assessing the bank's credit risk. All loan agreements are monitored continuously with regard to term payments, and any deviations are re- ported to the Board. A regulatory framework has been established for credit assessments, and the bank has a credit committee working within a mandate approved by the Board.
The bank has its own routine for securing a loan that is followed when a borrowing customer’s ability to service the loan is reduced, or if a value reduction on the collateral makes it necessary. The loan portfolio is continuously assessed, and if there should be an objective criteria for loss, there will be write-downs on the individual loans or groups of loans. Credit risk is discussed in more detail in con- nection with the balance sheet and profit and loss account.
Liquidity Risk The bank's liquidity risk is defined as the risk that the bank is unable to meet its debt obligations or that the bank cannot refinance its debt or finance its activity without incurring significant additional costs. According to the bank's policy document for liquidity risk, the liquidity risk must be low.
The policy document sets a minimum requirement for "weighted deposit coverage"1 of 110 %. The bank's weighted deposit coverage was 136 % at the end of 2018. In order to withstand large with- drawals and fluctuations in customer deposits, the bank holds a liquidity reserve and drawing rights in Norges Bank. The deposits in the daily settlement bank, DNB, are regulated on an ongoing basis to cover all payments.
Market Risk The bank's market risk is the risk that the value of the bank's assets will be reduced as a result of changes in market conditions. Management of the bank's market risk is done through defined maxi- mum limits for investments, specified in the bank's market risk policy document. According to this document, market risk shall be kept very low.
The bank's portfolio of interest-bearing securities consists of covered bonds and Treasury bills. All papers have high credit rates and variable interest rates at 3 months for interest rate adjustment (covered bonds), or a maximum 12-month maturity (Treasury bills), and thus have a relatively low exchange rate and interest rate risk.
The bank's portfolio of shares and other participations in other companies is relatively small, and consists of interests in related companies abroad and investments in strategic partners. It is consid- ered to be less exposed to the turmoil of the securities markets.
1 Weighted deposit coverage ratio: Deposits exceeding the deposit guarantee scheme are weighted 50 %
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Cultura Sparebank Annual report 2018
The interest rate risk which, with changes in the market interest rate, can lead to capital losses or pressure on the interest rate margin, is considered to be small. Cultura Bank does not offer fixed interest rates on loans, and has the ability to adjust interest rates for both deposits and loans within a short period of time.
The bank has a very limited currency risk, as lending and deposits across national borders are con- ducted in Norwegian kroner. However, the bank is exposed to currency risk due to the fact that in- voices from the bank's system vendor are billed in Danish kroner.
There have been no significant changes in policy or positions during the year.
Operational Risk Operational risk is the risk of financial loss due to errors in internal processes and systems, human error, or as a result of external events. According to the bank's policy document for operational risk, this risk must be very low. Management of operational risk is done through the bank's policies, rou- tines and guidelines, where the periodic review of an event log is an important element.
ICAAP In accordance with the capital adequacy framework, the bank annually prepares an ICAAP report. In this report, the bank assesses its capital needs by reviewing the bank's risk areas. The bank's various risks are described in more detail in its own risk report available on the bank's website.
Environment and Other Conditions Health, Safety and Environmental Issues No larger events concerning either the working or the social environment have been reported during the past year. The Board of Directors considers the working environment as good. No larger acci- dents or injuries have been registered in 2018.
• Absence due to illness amounted to 117,1 days, of which 53,2 days were short-term leave, and 63,9 days with medical verification. The sickness leave percentage was 3,4 % (3,6 % in 2017).
• Electric power consumption in 2018 was 71 229 kWh, versus 77 393 kWh in the previous year.
A handbook covering health, environment and safety issues has been issued, and these matters are followed up on a regular basis by a dedicated employee representative, together with the chief exec- utive officer.
Cultura Bank regards the responsibility for the environment as a main pillar of its activities, and con- siders its main contribution to be the financing of good projects in this area. In addition to this, the bank strives to live up to its high standards in its own conduct of business, and thus has laid down its own environmental policy.
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Cultura Sparebank Annual report 2018
Cultura Bank engages with policies that do not significantly pollute the environment and do not cause emissions. The bank is financing non-polluting and environmentally conscious activities, and thus the indirect pollution is seen as very modest.
The bank maintains an environmental certification called ”Miljøfyrtårn” or ”Environmental Beacon”. This certification entails an annual review of measures in this field, and the results of these. The certification was re- newed in 2016, and will be renewed again in 2019.
• Glass, plastics and electronic waste are disposed of separately as well as paper and cardboard. • The bank aims to use suppliers of office equipment that are environmentally certified, and the actual products should be environmentally marked and certified. None of the employees use a car to commute daily to work. • Business travel should, when possible, take place by public transport. • Teleconferences are preferred for meetings instead of travelling.
Gender Equality In its employment policy, the bank maintains a professional qualification line which is gender neutral.
The bank strives to provide women and men with equal opportunities for professional development and advancement, supports the “The Beijing Platform for Action (1995)”, and has signed “The Wom- en’s Empowerment Principles” (UN Global Compact).
The bank employs 7 men and 9 women. The managerial group consists of 1 man (General Manager) and 2 women (Deputy General Manager and Manager of the Loan Department)
The Board of Directors has 2 women and 4 men. The position of Chair is held by a female member, and the Deputy Chair is a man. Deputy board members are made up of 2 women and one man.
A new policy this year is that the bank actively addresses gender equality issues with corporate cus- tomers in connection with applications for loans. New loan customers are asked what the gender distribution is in their board and management. Companies with more than 10 employees are asked whether they have a gender equality policy, and whether they have made a wage difference analysis between women and men.
Social 2018 2017 Number of FTEs 15,0 16,4 Percentage of women by job level (in %) General Manager / CEO 0,0 0,0 Deputy General Manager 100,0 100,0 Department Manager 50,0 50,0 Other employees 54,5 46,2 All employees 56,3 50,0 Average salary Men 554 687 547 600
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Cultura Sparebank Annual report 2018
Women 522 566 499 489 All employees 536 619 523 544 Relationship between the median and the highest salary 1,67 1,70 Women’s salary as a percentage of men’s by level of employment (in %) General Manager / CEO 0,0 0,0 Deputy General Manager 100,0 100,0 Department Manager 91,2 94,1 Other employees 93,6 88,5 All employees 94,2 91,2 Sick leave (in %) Men 2,5 1,6 Women 4,2 5,6 All employees 3,4 3,6 Part timers (in %) Men 14,3 22,2 Women 22,2 22,2 All employees 18,8 22,2
Economy General Development In September 2018, the Norwegian Central Bank raised the key policy rate for the first time in seven years. The Norwegian Central Bank reports that the Norwegian economy is doing well. The effects of the fall in oil prices in 2014 have diminished, and there is steady growth in both production and em- ployment. The underlying inflation is close to the inflation target of two percent. With these circum- stances in mind, the Norwegian Central Bank has also announced more interest increases, gradually and cautiously, in the future.
Globalization, digitalization and restructuring are continuing trends. We are in a technology-driven growth process, which encompasses most of the world. A positive element within the big picture is that more people than ever have taken part in this strong development of prosperity.
But this growth is unevenly distributed. The winners in the global competition are achieving great gains, while broad groups of wage earners in traditional industrial countries have been lagging be- hind. Problems related to increased inequality must be taken seriously. This also applies in Norway.
With regard to Cultura's business, the general picture does not show any serious signs of alarm. A moderate increase in interest rates is also not expected to adversely affect the bank’s operations.
Main Features of Cultura Bank’s Economy for 2018 PROFIT AND LOSS ACCOUNTS The total operating income for 2018 was NOK 28,7 million, up by 10,3 % compared to 2017. Opera- tional expenses increased in the same period by 2,7 % to NOK 22,9 million. This gives an operating result of NOK 5,8 million, which is an improvement of 56,2 % compared to last year. Due to a fusion
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Cultura Sparebank Annual report 2018
between BankAxept AS, BankID AS and Vipps AS, the bank has been able to book an additional profit of NOK 865 000. Total profits on sales of financial assets is at NOK 1,1 million, which gives us a total profit before tax of NOK 7,0 million.
BALANCE SHEET Total assets increased as they did in 2017 with 12,9 % and ended up at NOK 1 066 million. Loans to customers increased by 12,3 % to NOK 636 million. Customer deposits increased by 13,9 % to NOK 952 million.
REVENUES Net interest income, the difference between the bank’s deposit and loan interest rate, the most im- portant revenue source for the bank, was NOK 22,2 million in 2018, compared to NOK 19,8 million the year before. Net interest income as a percentage of total assets fell marginally from 2,23 % to 2,21 %. Net provision income increased 2,6 % from NOK 7,6 million to NOK 7,8 million.
EXPENSES Salary and administration expenses increased 2,8 % in 2018 to NOK 18,7 million. The majority of this increase comes from administration costs, as salary costs have been kept low as a result of some- what reduced staffing.
LOSSES AND LOAN IMPAIRMENTS Payments on earlier write-downs resulted in a net income of NOK 55 000.
THE BOARD OF DIRECTORS’ PROPOSAL FOR ALLOCATION OF THE NET PROFIT
According to current laws, the net profit should be allocated proportionally between the bank’s own reserves and the capital issued through equity certificates. The Board thus proposes a payout of 3,0 % to the equity certificate owners, amounting to NOK 2 236 290. The Cultura Trust Foundation (Cultura Gavefond) is granted a gift of NOK 50 000. NOK 3 010 947 is retained in the equalization fund which is earmarked for future dividend pay-outs, the capital ratios allowing. The remaining net profit, amounting to NOK 180 086, is allocated to the bank’s own reserves.
Assets and Liabilities LOANS The bank’s bylaws and the credit policy laid down by the Board of Directors define the preferred loan purposes of the bank. Additionally, the credit risk in the loan book should be distributed in a respon- sible way. The bank performs a risk classification based on criteria for loan servicing ability and secu- rity, which provides a basis for assessing the bank’s credit risk. All loan servicing is followed up on an ongoing basis, and any deviations are reported to the Board. The bank has a credit handbook which contains the rules for credit assessments. The bank also has a credit committee which operates with a power of attorney within set limits. Loan in arrears by more than 90 days amounted to NOK 1 620 000 at the year end, which implies a significant increase from just NOK 94 000 in 2017. This increase is related to a single commitment, and is not considered to expose the bank to a loss. The increase in loans in arrears is not considered to reflect a corresponding increase in risk in the loan portfolio. Loans not in arrears, but with a higher probability of losses, totalled NOK 64 000 versus NOK 83 000 in 2017.
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Cultura Sparebank Annual report 2018
The bank has a routine for securing a loan if the customer lacks the ability to service the loan, or a weakness in the security is identified.
Total loans increased with 12,3 % to NOK 635,5 million from the end of 2017. Growth in outstanding loans is considered satisfactory. As a consequence of the bank’s distinctive mission, it has been stat- ed that at least 50 % of the loans should be loans to enterprises and green housing. As of 31.12.2018 the total loan portfolio meets this requirement.
The loan policy stresses the qualitative profile of the loans. The reporting of the bank visualizes this by subdividing the loan book into the categories People, Planet, Prosperity, the terms also used by the reporting in the scorecard system developed by the GABV. This is also referred to as triple bot- tom line lending. In the People category, loans concerning education, art and healthcare can be found. Planet includes organic agriculture and distribution of green products, as well as ecological building and other environmental projects. Prosperity is used for loans to various small, local busi- ness purposes. In addition to the above mentioned categories, Cultura is offering normal housing loans which now constitute 37 % of total loans, and miscellaneous other purposes which add up to a mere 2,4 % of total loans. The table below shows a more detailed picture, according to the GABV reporting format. Social inclusion can also be found in this category, which concerns lending to social therapy activities for mentally disabled people.
OUTSTANDING LOANS BY PURPOSE 31.12.2018 Purpose NOK In % arts and culture 41 308 667 6,50 % education 116 973 320 18,41 % People healthcare 4 916 616 0,77 % social inclusion 43 083 970 6,78 % other - people 3 178 430 0,50 % distribution of ecological products 6 150 840 0,97 % green housing 72 596 340 11,42 % sme lending 73 915 0,01 % Planet renewable energy and low carbon 191 276 0,03 % sustainable agriculture 66 394 100 10,45 % water efficiency/ reduction/ access 618 567 0,10 % other - planet 21 479 017 3,38 % microfinance for micro enterprise 81 198 0,01 % Prosperity sme lending 5 028 863 0,79 % other - prosperity 3 067 674 0,48 % housing 235 027 850 36,98 % Other other 15 337 923 2,41 % Total 635 508 566 100 %
CUSTOMER DEPOSITS Growth in customer deposits have also been very strong in 2018. Since the end of 2016, deposits have grown 13,9 %. This increase corresponds to those we have experienced in previous years. De- posit coverage ratio is at 150 %. The sizeable surplus of liquidity is mainly invested in covered bonds and government securities. The bank has a very conservative investment profile. Increased limits on investments in covered bonds have led to an increased volume invested in covered bonds, equivalent
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Cultura Sparebank Annual report 2018
with a reduced volume of investments in low-yield Norwegian Treasury bills. In addition to invest- ments in covered bonds and treasury bills, the bank has the necessary deposits in Norges Bank and DNB as a settlement bank. The bank’s securities are highly liquid, and are deposited as collateral for the bank’s withdrawal access in Norges Bank. The bank’s current policy demands a minimum “weighted” deposit coverage ratio of 110 %. In the weighted deposit coverage ratio those deposits that are not covered by the Norwegian Bank’s Guarantee Fund are given a weight of 50 %. As of 31.12.2018, the bank’s weighted deposit coverage ratio is at 136 %. The liquidity risk in the bank is considered very moderate.
CAPITAL COVERAGE AND EQUITY Total capital coverage ratio was 22,52 % at year end, up from 23,50 % the year before. Core equity capital coverage was also 22,52 %. The bank has exercised its right to call its subordinated loan of NOK 15 million on the first ordinary call date. Concurrently the bank issued a perpetual subordinated loan of NOK 15 million. This has improved the balance within the capital coverage ratio. Core equity capital coverage was at 19,25 %. As of 31.12.2018 the bank still satisfies external as well as internal requirements on capital coverage. In order to achieve the bank’s goals of continued expansion, it is essen- tial that the equity base is strengthened further through the issuance of new equity certificates. Issuing new equity certificates remains the bank’s main source of capital. A new issuance is planned for the first half of 2019. The equity certificates are registered in the central security registry, VPS, but are not listed on the Oslo Stock Exchange.
The Saving Bank’s fund is composed of the initial gifts from inauguration as well as retained earnings throughout the years. A proportional part of the year to year earnings are allocated to the equaliza- tion fund, which, as mentioned above, is earmarked for future distribution as dividends, to the de- gree the total capital adequacy permits it.
Cultura Gift Fund and Cultura Guarantee Fund Cultura Gift Fund makes donations to research and development pro- jects, including the testing of new ideas in the field of social develop- ment. The fund operates independently from the bank. The majority of the fund’s capital is invested in equity certificates of the bank.
Cultura Guarantee Fund can offer guarantees in favour of worthy loan projects, where the security is deemed insufficient to satisfy the normal requirements of the bank. Although the fund has a relatively small capital base, the effect of the guarantees may be quite signifi- cant.
Both funds are self-governing trusts, legally independent from the bank.
Marketing and Communication Marketing and communications efforts are based on the bank’s communication strategy, which is continuously assessed and revised.
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Cultura Sparebank Annual report 2018
The bank has, for the third year in a row, received first place in the Ethical Banking Guide. This has been an important contribution in spreading knowledge about the bank and its ethical profile.
New this year is Cultura Bank’s own crowd funding plat- form, CulturaFlokk, which was up and running at the end of the first quarter in 2018. CulturaFlokk facilitates dona- tion and reward-based projects that are in line with the bank’s value base, and do not provide loans or equity. The platform is both a commitment for highlighting the im- portance of gift money, as well as being a good tool for establishing contact with new projects. During 2018 a total of 1,3 million NOK has been given through CulturaFlokk spread over 32 projects. Cultura Bank is a member of the Norwegian Crowdfunding Association.
The Bank’s Main Communication Channels • Websites • Social media – mainly Facebook • Pengevirke – magazine for a new banking culture (published quarterly) • Advertisements - on paper as well as through electronic media • Participation in seminars, festivals and other public events such as: o Sponsor and participant at the BI seminar on green growth o The main focus of the year was the sponsorship and participation at Økouka 2018. o During Økouka, Cultura Bank organized Økoorientering, where participants were equipped with maps and encouraged to visit a selection of Cultura customers and other ecologically oriented business in Oslo. Due to its popularity, this will most likely be repeated in 2019. o Sponsor and co-host for Steineruka 2018 o Banking on Values Day – Open day with an evening lecture from Cultura customer Jan Schøyen from Veien Ut. o Sponsor of Matprisen 2018
In terms of manpower, the marketing efforts consume about one full employment position, divided equally between two co-workers. In addition to this, the bank is outsourcing graphic design, internet pages, text writing and some of the additional public relations work.
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Cultura Sparebank Annual report 2018
Non-Governmental Organisations CONTRIBUTION TO PARTNER ORGANISATIONS IN 2018
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Cultura Sparebank Annual report 2018
Other Matters and Outlook for the Future The accounts and the information provided in the annual report represent a true picture of the de- velopment, the financial results and the total position of the bank. The Board of Directors is not aware of matters that are not reflected in the profit and loss accounts and the balance sheet of the bank. Furthermore, the Board is not aware of any occurrences taking place after the closing of the accounts that may affect the position of the bank. The bank is deemed well prepared to meet further challenges in the year ahead. The budget for 2019 sees a positive result, and the accounts have been submitted under the assumption of continued operations of the bank.
Expression of Gratitude The Board of Directors express its gratitude to the bank’s staff in recognition of the good work per- formed. Further thanks go to the bank’s customers, the owners of equity certificates, and the elected representatives. The existence of Cultura bank is dependent on support from individuals and groups to realize a common goal of developing a beneficial and sustainable economic activity.
Oslo, 14.03.2019
Maria Bjune Christian Dubrau Øyvind Vestre Styreleder Nestleder Styremedlem
Randi A. Welhaven Bjarne Hjertholm Morten Johannessen Styremedlem Styremedlem Styremedlem (ansattes representant)
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Cultura Sparebank Annual report 2018
Profit and Loss Statement In thousands of NOK Notes 2018 2017 Interest income from loans and receivables on credit institutions 462 398 Interest income from loans to customers 22 767 21 631 Interest income from bonds, certificates and financial derivatives 2 997 1 454 Other interest income 0 0 Total interest and related income 26 226 23 483 Interest expense on deposits from and debt to customers 2 596 2 362 Interest expense on subordinated loan capital 890 780 Other interest expenses 536 512 Total interest and related expenses 4 022 3 654 Net interest and credit commission income 22 204 19 829 Income from shares, participations and other securities with variable earnings 87 37 Total income from shares, participations and other securities with variable earnings 87 37 Guarantee commission income 230 188 Other fees and commission income 7 618 7 464 Total fees and other income from banking activities 9 7 848 7 652 Guarantee commission expenses 249 268 Other fees and commission expenses 2 154 2 022 Total fees and other expenses on banking services 2 403 2 290
Net gains and losses from notes, bonds, and other interest-bearing securities 768 590 Net gains and losses from shares and participations -94 -70
Net gains and losses from foreign exchange and financial derivatives 324 295 Total gains and losses on foreign exchange and financial derivatives 998 815
Total operating income 28 734 26 043 Salaries etc. 7 11 843 11 744 Salary expenses 9 053 8 986 Pension expenses 727 698 Social security expenses 2 063 2 060 Administrative expenses 9 6 905 6 495 Total salary expenses and general administrative expenses 18 748 18 239 Ordinary depreciation on fixed assets and intangible assets 4 1 407 1 469 Other operating expenses 9 2 739 2 596 Total operating expenses 22 894 22 304 Operating profit before impairment losses 5 840 3 739 Losses on loans, guarantees, etc. 2 -55 -381 Net gains on fixed and intangible assets 3 1 146 15 Profit before taxes 7 041 4 135 Taxes expense 8 1 564 1 073 Profit after tax 5 5 477 3 062
Allocations Dividend on equity certificates 2 236 1 396 Transferred to Equalization fund 5 3 011 1 538 Transferred to gift fund 50 50 Transferred to the Savings Bank’s Fund 5 180 78 Total allocations 5 477 3 062
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Cultura Sparebank Annual report 2018
Balance Sheet as of 31.12.2018 In thousands of NOK Notes 2018 2017 Cash and claims on the Norwegian Central Bank 68 113 56 281
Loans and claims on credit institutions 21 910 10 378
Overdrafts and other operational credits 17 588 14 780
Construction loans 0 5 059
Loans to customers 617 920 545 925
Total loans before value adjustments 635 508 565 764 value adjustments on individual loans -144 -189
value adjustments on groups of loans -1 327 -1 327
Net sum loans and claims on customers 2 634 037 564 248 Certificates and bonds issued by public authorities 139 848 109 707
Certificates and bonds issued by other organisations 189 883 190 795
Total certificates and bonds 3 329 731 300 502 Shares, interests and equity certificates 3 8 334 7 651 Deferred tax credits 8 145 163 Other intangible assets 4 1 481 2 700 Total intangible assets 1 626 2 863 Fixed assets, machinery, inventory and means of transport 4 578 575 Other assets 7 21
Accrued income 1 385 996
Pre-paid non-accrued income 647 1 281
Total pre-paid expenses and accrued income 2 032 2 277 TOTAL ASSETS 6 1 066 368 944 796
Deposits from and liabilities to credit institutions 51 30
Deposits from and liabilities to customers without agreed maturity 925 271 812 065
Deposits from and liabilities to customers with agreed maturity 26 280 23 414
Total deposits and liabilities to customers 6 951 551 835 479 Other liabilities 9 7 519 5 145 Accrued expenses and received non-accrued income 2 411 2 425
Subordinated loan 5 15 000 14 970 TOTAL LIABILITIES 976 532 858 049 Share capital 74 543 74 543
Bank owned equity certificates -926 -824
Equity capital 5 73 617 73 719 The Saving Bank’s Fund 3 858 3 678
Equalization Fund 12 361 9 350
Accrued equity 5 16 219 13 028 TOTAL EQUITY 89 836 86 747 TOTAL EQUITY AND LIABILITIES 6 1 066 368 944 796
Guarantees 2 5 969 9 610
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Cultura Sparebank Annual report 2018
Oslo, 14.03.2019
Maria Bjune Christian Dubrau Øyvind Vestre Styreleder Nestleder Styremedlem
Randi A. Welhaven Bjarne Hjertholm Morten Johannessen Styremedlem Styremedlem Styremedlem (ansattes representant)
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Cultura Sparebank Annual report 2018
Notes to the Accounts 1. General Accounting Principles The bank’s annual fiscal statement has been produced in accordance with current laws and regula- tions for savings banks and generally accepted accounting standards. Each note to the accounts elaborates on the principles used for the given item with reference to the individual items in the fi- nancial statement.
Accruals of incomes and expenses: Interest and commission income or expenses are allocated to the period in which they arise. Pre-paid income and accrued, non-paid expenses are assigned to the ac- crual period and booked as a liability in the balance sheet. Arrangement fees on new loans to cover corresponding processing costs are recorded as income at the time of payment. Balance sheet items in foreign currencies are converted using the balance sheet day’s exchange rate.
2. Loans and Guarantees
GUARANTEES BY TYPE In thousands of NOK 2018 % 2017 % Payment guarantees 5 969 100,0 9 610 100,0 Loan guarantees 0 0,0 0 0,0 Total guarantees 5 969 100,0 9 610 100,0
GUARANTEES BY SECTOR In thousands of NOK 2018 % 2017 % Private limited liability company 3 547 59,4 2 502 26,0 Non-profit organizations 2 263 37,9 6 670 69,4 Sole proprietorship 0 0 10 0,1 Private households 159 2,7 150 1,6 Foreign companies 0 0 278 2,9 Total guarantees 5 969 100,0 9 610 100,0
GUARANTEES BY INDUSTRY In thousands of NOK 2018 % 2017 % Agriculture and related services 0 0 10 0,1 Retail, repair of motorized vehicles 465 7,8 665 6,9 Transport and storage 77 1,3 152 1,6 Information and communication 0 0 0 0 Sale and management of real estate 123 2,0 0 0 Commercial services 2 767 46,4 1 570 16,3 Other service industries 2 537 42,5 6 785 70,6 Private sector 0 0 150 1,6 Foreign companies 0 0 278 2,9 Total guarantees 5 969 100,0 9 610 100,0
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Cultura Sparebank Annual report 2018
GUARANTEES BY GEOGRAPHIC AREA In thousands of NOK 2018 % 2017 % Østfold 50 0,8 50 0,5 Akershus 1 738 29,1 6 146 63,9 Oslo 4 031 67,5 2 901 30,2 Vestfold 75 1,3 10 0,1 Rogaland 0 0 75 0,8 Hordaland 0 0 75 0,8 Trøndelag 75 1,3 75 0,8 Nordland 0 0 0 0 Outside of Norway 0 0 278 2,9 Total guarantees 5 969 100,0 9 610 100,0
LOANS BY SECTOR In thousands of NOK 2018 % 2017 % Private limited liability company 60 642 9,5 66 322 11,7 Privately owned companies 19 497 3,1 11 620 2,1 Non-profit organizations 176 400 27,8 171 978 30,4 Sole proprietorship 64 186 10,1 60 211 10,6 Housing associations 2 646 0,4 3 239 0,6 Private households 310 604 48,9 252 136 44,6 Foreign companies 213 0,0 257 0,0 Foreign households 1 320 0,2 1 0,0 Total loans 635 508 100,0 565 764 100,0
LOANS BY INDUSTRY In thousands of NOK 2018 % 2017 % Agriculture and related services 63 004 9,9 51 359 9,1 Manufacturing 6 226 1,0 8 895 1,6 Building of ships and boats 0 0,0 1 0,0 Water supply, sewage, waste management and 1 0,0 0 0,0 remediation activities Construction 6 845 1,1 1 108 0,2 Retail, repair of motorized vehicles 0 0,0 8 908 1,6 Accommodation and food service activities 327 0,1 1 135 0,2 Information and communication 1 0,0 0 0,0 Sale and management of real estate 49 612 7,8 51 275 9,1 Finance and insurance activities 737 0,1 592 0,1 Commercial services 1 883 0,3 1 951 0,3 Other service industries 194 735 30,6 188 146 33,3 Private households 312 137 49,1 252 394 44,5 Total loans 635 508 100,0 565 764 100,0
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Cultura Sparebank Annual report 2018
LOANS BY GEOGRAPHIC AREA In thousands of NOK 2018 % 2017 % Østfold 32 535 5,1 31 414 5,6 Akershus 127 781 20,1 108 385 19,2 Oslo 217 918 34,4 201 057 35,5 Hedmark 43 119 6,8 44 783 7,9 Oppland 14 555 2,3 13 591 2,4 Buskerud 43 739 6,9 39 027 6,9 Vestfold 40 136 6,3 31 423 5,6 Telemark 4 326 0,7 4 491 0,8 Aust-Agder 1 344 0,2 1 602 0,3 Vest-Agder 1 0,0 30 0,0 Rogaland 14 765 2,3 8 749 1,5 Hordaland 19 113 3,0 21 044 3,7 Sogn og Fjordane 900 0,1 571 0,1 Møre og Romsdal 1 246 0,2 2 013 0,4 Nordland 17 145 2,7 14 716 2,6 Troms 21 524 3,4 16 802 3,0 Finnmark 3 963 0,6 4 082 0,7 Trøndelag 29 865 4,7 21 726 3,8 Outside of Norway 1 533 0,2 258 0,0 Total loans 635 508 100,0 565 764 100,0
Valuations, Descriptions and Definitions The loan portfolio is valued on a continuous basis, and if objective criteria indicate that a loss might occur, value adjustments will be made pertaining to individual loans or groups of loans as the case may be. The depreciation is reflecting the present value effect of losses on future in- come. This discount method is termed the ”effective interest method” as defined in the official banking regulations
Loans in default are loans where an agreed payment is more than 90 days overdue, or when a credit limit is exceeded and not covered within 90 days.
Other loss-exposed loans are loans which are not in default, but where the customer’s economic situation makes it likely that a loss might occur at a later point in time.
Actual losses are considered final upon confirmation of a debt settlement agreement or bankruptcy; when debt negotiations have not led to any conclusions through a valid legal ruling; by the bank abandoning the whole or part of the commitment; or when the commitment is considered lost by the bank.
Depreciation due to an individual loan’s decreased value is a write-down in order to cover the ex- pected loss of a loan identified as loss exposed by the bank on the balance sheet day.
Depreciation due to groups of loans’ decreased values is write-downs in order to cover expected losses on groups of loans which are not in default or specifically identified as exposed to losses.
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Cultura Sparebank Annual report 2018
DEFAULTS AND LOSS-EXPOSED COMMITMENTS In thousands of NOK 2018 2017 2016 2015 2014 Gross defaults over 90 days 1 620 94 370 1 101 405 - Individual defaults 80 100 370 513 404 Net defaults 1 540 -6 0 588 1 Gross exposed non-defaulted commitments 64 83 1 597 835 704 - Individual write-downs 64 89 570 410 410 Net exposed non-defaulted commitments 0 -6 1 027 425 294
WRITE DOWNS ON LOANS AND CLAIMS ON CUSTOMERS In thousands of NOK 2018 2017 The period’s change in write-downs on individual loans -45 -751 + The period’s change in write-downs on groups of loans 0 0 + The period’s ascertained losses against previous write-downs 0 370 + The period’s losses without previous write-downs 0 1 - The period’s recovery of previously ascertained losses 10 1 The period’s loss expense -55 -381 Write-downs on individual loans as of 1/1 189 940 This year’s write-downs -45 -751 Write-downs on individual loans as of 31/12 144 189 Write-downs on groups of loans as of 1/1 1 327 1 327 This year’s write-downs 0 0 Write-downs on groups of loans as of 31/12 1 327 1 327
Booked interest income pertaining to depreciated loans amount to NOK 4 520.
LOANS AND GUARANTEES BY RISK CATEGORY WITH CORRESPONDING WRITE-DOWNS Class Loans Guarantees Drawing rights Total Write downs Description In thou- sands of 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 NOK Class A 566 328 490 578 3 109 7 517 11 879 20 638 581 316 518 733 0 0
Group- Class B 66 941 72 615 2 860 2 093 1 368 1 354 71 169 76 062 961 948 depreciation Group- Class C 0 257 0 0 0 0 0 257 0 64 depreciation Group- Class D 619 708 0 0 201 55 820 763 366 315 depreciation Individual write- Class E 1 620 1 606 0 0 0 0 1 620 1 606 144 189 downs Total 635 509 565 764 5 969 9 610 13 448 22 047 654 925 597 421 1 471 1 516
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Cultura Sparebank Annual report 2018
The bank’s credit exposure is classified in risk compartments A-E, A representing the highest credit quality. The classification is initially made when the loan is granted, followed by regular revisions. The risk classification forms the basis for potential depreciations. The bank makes group depreciations for risk compartments B, C and D. Engagements in compartment E are subject to individual write downs.
The risk classifications are derived from the customers’ loan servicing capability as well as from the security posted, both on a scale from A to E, A representing the highest score. The evaluation renders 25 combinations which are distributed into risk compartments A-E, as shown in the table below:
Security posted A B C D E Ability to payAbility A A A A B B B A A B B B C A B B C D D B B C D D
E B C C D E
Future Development Exposures in risk compartments A and B constituted 99 % of the total exposures as of 31.12.2018. . Individual write-downs amounted to NOK 144 000, against NOK 189 000 the previous year. During 2018 the bank realized a NOK 0 loan loss just like in 2017. Group depreciations are kept at NOK 1 327 000, unchanged from the year before. During 2018, repayments on earlier write-downs resulted in a net income of NOK 54 693 against a net income of NOK 381 261 during 2017. The bank maintains a strong focus on customers’ loan servicing ability, and thus expects to be able to maintain a low de- fault ratio. The total loan loss situation is regarded as very satisfactory entering the year 2019.
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Cultura Sparebank Annual report 2018
3. Interest Bearing Securities, Certificates, Shares and Other Interests Valuation Principles The bank’s shares in other companies are classified as a long-term investment, and valued at acquisi- tion cost. No adjustment is made for continuous exchange rate changes. However, the values will be depreciated if the market value is significantly lower than the book value, and the decrease in value is not considered a temporary occurrence.
SHARES AND OTHER PARTICIPATIONS IN OTHER COMPANIES
Booked Estimated Organisational Number of Curren- Nominal Acquisition value market value Name number shares cy value cost (NOK) (NOK) (NOK) Merkur 837 DKK 837 000 1 480 800 1 480 800 1 940 189 Ekobanken 381 SEK 381 000 351 225 351 225 463 858 Triodos 100 EUR 6 400 52 474 52 474 83 566 Sefea 26 EUR 13 000 116 933 116 933 129 328 La Nef 4 070 EUR 122 100 915 897 915 897 1 214 687 Banca Etica 180 EUR 9 450 78 381 78 381 102 965 Eiendomskreditt 979 391 285 15 072 NOK 1 507 200 1 570 502 1 570 502 2 163 284 SDC 5 646 DKK 565 200 2 628 784 2 554 472 2 888 295 Vipps AS 918 713 867 229 NOK 906 270 906 270 906 270 906 270 SustainFin SICAV 988,37 EUR 50 000 471 034 307 210 395 664 VN Norge AS 821 083 052 961 billion NOK 0 0 0 899 420 Total 8 572 300 8 334 164 11 187 526
CHANGES IN SHARES AND OTHER PARTICIPATIONS IN OTHER COMPANIES Name Incoming balance Acquisitions/Sales Impairment Outgoing balance Merkur 1 480 800 0 0 1 480 800 Ekobanken 351 225 0 0 351 225 Triodos 52 474 0 0 52 474 Sefea 116 933 0 0 116 933 La Nef 915 897 0 0 915 897 Banca Etica 78 381 0 0 78 381 Eiendomskreditt 1 570 502 0 0 1 570 502 SDC 2 915 647 -361 175 0 2 554 472 Vipps AS2 0 906 270 0 906 270 Bank Axept AS 25 000 -25 000 0 0 Bank ID 15 826 -15 826 0 0 SustainFin 127 966 273 721 -94 477 307 210 SICAV Total 7 650 651 777 990 -94 477 8 334 164
2 In connection with the merger between BankAxept AS, BankID Norge AS and Vipps AS, the bank's holdings of shares in BankAxept As and BankID Norge AS (total book value NOK 40 826) have been deleted, and consideration shares were issued in Vipps AS to a value of NOK 906 270. The difference, NOK 865 444, is recorded as a gain on the sale of financial fixed assets.
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Cultura Sparebank Annual report 2018
Valuation of the Bank’s Portfolio of Interest Bearing Securities The security portfolio has initially been booked at purchase value, and is subject to depreciation if the value at balance sheet close is lower than original book value.
BONDS AND TREASURY BILLS Name (risk weight) Book Face Cost Market Listed on stock In thousands of NOK value value price value exchange Treasury bills (0 %) 119 798 120 000 119 832 119 832 119 832 Communal bonds (20%) 20 050 20 000 20 052 20 049 20 049 Covered bonds (10 %) 179 812 180 000 179 874 181 125 181 125 Foreign covered bonds (10%) 10 071 10 000 10 091 10 071 10 071 Total: 329 731 330 000 329 849 331 077 331 077 The average effective interest rate is 1,53 % for covered bonds, 1,19 % on communal bonds and 0,60 % on Treasury bills. Bonds and treasury bills with a book value of NOK 317,8 million are pledged as collateral for an over- draft facility with the central bank.
4. Fixed Assets and Intangible Assets Valuation Principles Fixed assets are booked at acquisition cost, with the deduction of ordinary depreciation and write- downs. Ordinary depreciations are based on initial cost, the depreciation amounts being evenly dis- tributed in line with the expected economic lifetime of the asset.
SPECIFICATION In thousands of NOK Fixed assets Intangible fixed assets Acquisition cost as of 1.1.2018 1 136 8 389 Acquisitions during the year 115 75 Disposals during the year 0 0 Acquisition cost as of 31.12.2018 1 251 8 464 Total depreciations and write-downs as of 1.1.2018 560 5 689 Ordinary depreciations during the year 113 1 294 Write-downs during the year 0 0 Decrease in ordinary depreciations during the year 0 0
Total depreciations and write-downs as of 31.12.2018 6 983 673
Booked value as of 31.12.2018 1 481 578
Depreciation rate 3 - 10 years 5 years
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Cultura Sparebank Annual report 2018
INVESTMENTS IN TANGIBLE AND INTANGIBLE FIXED ASSETS In thousands of NOK 2018 2017 2016 2015 2014 Purchase of machinery and inventory 115 64 41 854 0 Intangible assets 75 138 214 3 265 2 407
No fixed assets were sold in the period 2012-2018.
The investments in connection with conversion to a new data system in 2015 have been booked as intangible assets, and are subject to depreciation over 5 years.
Lease of Office Space Cultura Bank has a lease contract for office space at Holbergs gate 1, expiring 30.05.2026. The annual lease for a space of 477 m2 is NOK 1 257 960. The lease is adjusted annually, in line with the consum- er price index.
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Cultura Sparebank Annual report 2018
5. Capital
REGULATORY CAPITAL In thousands of NOK 31.12.2018 31.12.2017 Share capital 1/1 74 543 65 110 Issue of new certificates 0 9 433 Bank owned equity certificates -926 -824 Total issued equity 73 617 73 719
The Savings Bank’s Fund 1/1 3 678 3 600 Retained earnings 183 78 Total retained earnings and Savings Bank’s Fund 3 861 3 678
Equalisation Fund 1/1 9 350 7 812 Previous year retained earnings 3 008 1 538 Total equalisation Fund 12 358 9 350
Total common equity Tier 1 capital instruments before deductions 89 836 86 747
CET1 instruments of financial sector entities where the institution 0 0 does not have a significant investment Intangible assets -1 481 -2 700 Total common equity Tier 1 capital instruments after deductions 88 355 84 047
Subordinated loan capital (Tier I) 15 000 0 Tier 1 capital 103 355 84 047
Subordinated loan capital (Tier II) 0 14 970 Total Eligible Regulatory Capital 103 355 99 017
CHANGES IN REGULATORY CAPITAL Savings Bank’s Share Bank owned Equalisation Total Equity certifi- Fund capital cates Fund Share capital 1/1 3 678 74 543 -824 9 350 86 747 Issue of new certificates Allocation of retained earnings without dividends payable 180 3 011 3 191 Sale/Purchase of own equity certificates -102 -102 Share capital 31/12 3 858 74 543 -926 12 361 89 836
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Cultura Sparebank Annual report 2018
BASIS FOR CALCULATION OF EQUITY REQUIREMENT BY EXPOSURE CATEGORIES In thousands of NOK 31.12.2018 31.12.2017 Central governments and central banks 0 0 Regional governments or local authorities 4 010 0 Public sector entities 0 0 Institutions 9 282 7 276 Corporates 55 308 57 751 Secured by mortgages in immovable property 299 634 268 375 Exposures in default 1 739 50 Covered bonds 18 988 18 980 Other items 14 237 14 689 Risk weighted exposure amount for credit 403 198 367 121
+ Risk exposure amount for operational risk 49 774 46 913 + Risk exposure amount for credit valuation 6 065 7 369 - Deductions for loan loss provisions 0 0 Total risk weighted assets 459 037 421 403
Equity as a % of total assets 8,42 9,18
Common Equity Tier I (as a % of risk exposure amount) 19,25 19,94 Tier I capital (as a % of risk exposure amount) 22,52 19,94 Total capital (as a % of risk exposure amount) 22,52 23,50
Equity Ratio As of December 31st 2018, total capital requirements for common equity capital consist of a capital conservation buffer of 2,5 %, a system risk buffer of 3,0 %, and a counter-cyclical buffer of 2,0 %. These requirements are in addition to a minimum requirement of common equity of 4,5 %. In sum, Pillar 1 and buffer requirements are 12,0 % combined. In addition, Finanstilsynet has assigned Cultu- ra Bank a Pillar 2 requirement of 4,5 %. Total minimum common equity capital requirement, includ- ing the Pillar 2 requirement, is therefore 16,5 %. Regulatory requirements for Tier I capital and Total capital are 18,0 % and 20,0 % respectively. The Board of the bank has determined that an additional 0,7 % is added for internal minimum requirements. Thus, as of 31.12.2018, internal requirements are 17,2 % for CET I capital, 18,7 % for Tier I capital, and 20,7 % for total capital. These requirements are met by a good margin. Due to the issuance of a perpetual bond a NOK 15 million, the bank has in- creased its Tier I capital by 2,58 percentage points.
Subordinated Debt The bank has exercised its right to call its subordinated loan of NOK 15 million on the first ordinary call date. Concurrently the bank issued a perpetual subordinated loan on 23.11.2018 of NOK 15 mil- lion which satisfies the requirements of CRD IV to be counted as Tier I capital in accordance with § 15 of the capital regulations. The bank can use its right for partial or full pre-payment at par value for the first time on 23.11.2023, and thereafter after each interest pay-out. The running interest rate at
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Cultura Sparebank Annual report 2018
year end was 7,22 %, and the loan was issued at 3 month NIBOR plus a margin of 6 %. Book value of the loan at year end was NOK 15 000 000.
EQUITY CERTIFICATES OWNED BY ELECTED REPRESENTATIVES AND MANAGEMENT AS OF 31.12.18 Number of Name Member of certificates* Kjell Fredrik Løvold CEO, General Manager 125 Assistant General Manager, Board of Trus- Jannike Østervold tees 5 Johannes Brinkmann Board of Trustees 5 Lars Hektoen Board of Trustees 223 Elizabeth Brockfield and through Nea 2 AS Board of Trustees 721 Rune Horne Board of Trustees 50 Åsa Jeppsson Board of Trustees 3 Anne-Kristin Løes Board of Trustees 100 Stian Torstenson Board of Trustees 3 Elizabeth Wirsching Board of Trustees 6 Kjersti Aspheim Board of Trustees 100 Maria Bjune Board 25 Christian Dubrau through Bykuba AS Board 45 Øyvind Vestre samt through Aktiv Arena AS Board 23
* An Equity Certificate’s nominal value is NOK 1 000
THE 20 LARGEST OWNERS OF EQUITY CERTIFICATES AS OF 31.12.18 Number of Name Nationality certificates Camphills Forvaltningsfond NO 8 140 Personellservice Trøndelag NO 3 750 Crédit Coopératif FR 3 427 A/S Skarv NO 3 000 Cultura Gavefond NO 2 211 Liv Bråten NO 2 050 Acini Capital AS NO 2 000 La Nef FR 1 856 Gemeinnützige Treuhandstelle e.V. DE 1 855 Ekobanken SE 1 822 Banca Popolare Etica IT 1 500 GLS Gemeinschaftsbank DE 1 300 Merkur, Den Almennyttige Andelskasse DK 1 294 Annette Holding AS NO 1 000 Triodos Bank NL 1 000 O. Kavli og Knut Kavlis allmennyttige fond NO 1 000 Granly Stiftelse NO 1 000 APS bank Ltd. MT 800 Opplysningsvesenets fond NO 750
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Cultura Sparebank Annual report 2018
Forsvarets Personellservice NO 750 Total 40 505 Equity certificates held by the bank 926
Other equity certificate holders 33 112 Total equity certificates 74 543
Acquisition of Own Equity Certificates Cultura Bank’s holdings of its own equity certificates have increased from 824 to 926 during 2018. All purchases and sales have been made at par exchange rates. The reason for the purchases is that the bank wants to contribute to the sale of equity certificates. Self-procurement of equity certificates is used as an instrument to give the paper increased liquidity.
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Cultura Sparebank Annual report 2018
6. Liquidity, Financing and Interest Expense
MAIN BALANCE SHEET ITEMS BY TIME TO MATURITY Up to 1 month - 3 months - 1 year - over No In thousands of NOK 1 month 3 months 1 year 5 years 5 years Maturity Total Cash and claims on central banks 68 021 0 0 0 0 92 68 113 Loans to and claims on credit institutions 21 910 0 0 0 0 0 21 910 Loans to and claims on customers 1 021 4 765 22 102 131 728 458 304 16 117 634 037 Bonds and other interest-bearing papers 0 119 797 45 138 164 796 0 0 329 731 Other assets 1 291 591 1 308 975 78 8 334 12 577 Total assets 92 243 125 153 68 548 297 499 458 382 24 543 1 066 368
Deposits from and liabilities to 951 602 0 0 0 0 0 951 602 customers Other liabilities 3 954 4 790 1 186 0 0 0 9 930 Equity 0 0 0 0 0 89 836 89 836 Subordinated loan 0 0 0 0 15 000 0 15 000 Total equity and liabilities 955 556 4 790 1 186 0 15 000 89 836 1 066 368
Net liquidity exposure on the -863 313 120 363 67 362 297 499 443 382 -65 293 0 balance sheet
Bank overdrafts are classified as having no maturity.
MAIN BALANCE SHEET ITEMS BY TIME LEFT TO NEXT INTEREST RATE ADJUSTMENT Without Up to 1 month - 3 months - 1 year - over interest In thousands of NOK 1 month 3 months 1 year 5 years 5 years exposure Total Cash and claims on central banks 0 68 021 0 0 0 92 68 113 Loans to and claims on credit institutions 21 910 0 0 0 0 0 21 910 Loans to and claims on customers 0 634 037 0 0 0 0 634 037 Bonds and other interest-bearing papers 29 912 299 819 0 0 0 0 329 731 Other assets 0 0 0 0 0 12 577 12 577 Total assets 51 822 1 001 877 0 0 0 12 669 1 066 368
Deposits from and liabilities to 0 951 602 0 0 0 0 951 602 customers Other liabilities 0 0 0 0 0 9 930 9 930 Equity 0 0 0 0 0 89 836 89 836 Subordinated loan 0 15 000 0 0 0 0 15 000 Total equity and liabilities 0 966 602 0 0 0 99 766 1 066 368
Net interest exposure on the 51 822 35 275 0 0 0 -87 097 0 balance sheet
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Cultura Sparebank Annual report 2018
The bank’s interest rate risk is very moderate in relation to the size of the balance sheet. At year end the total interest rate sensitivity was such that a 1 % parallel shift in the interest rate curve would have an effect on annual earnings of approximately NOK 625 000. All balance sheet items have been included in the calculation and the bank has no off balance sheet positions.
AVERAGE INTEREST RATES ON CUSTOMER DEPOSITS Deposits without agreed tenor or notice: 0,29 % Deposits with agreed tenor or notice: 0,17 % The average interest rates are calculated on the basis of actual interest payments as a percentage of average customer deposits for the year. Regulatory liquidity requirements demand that banks should be able to withstand a prolonged peri- od without access to new market financing. The Liquidity Coverage Ratio (LCR) measures the bank’s liquid assets as a percentage of net outflows of funds over a 30 day period given a stress scenario. Cultura Bank’s LCR ratio at year end was 322 %, well in excess of our internal requirement of 125%.
KONTANTSTRØMSANALYSE In thousands of NOK 2018 2017 Net profit 7 041 4 135 - paid taxes 1 038 1 017 + losses on loans and guarantees -44 -751 + depreciation 1 407 1 469 - dividends paid and gift fund contribution 1 446 1 027 Cash flow from ordinary operations 5 920 2 809 Subordinated loan 0 0 Issue of/change in equity certificates -102 8 609 Supplied from this year’s operations 5 818 11 418 Increase in funds entrusted 116 093 98 189 Increase in other receivables 259 0 Increase of other liabilities 1 041 0 Gross liquidity from operations 123 211 109 607 Application of funds: Increase in loans 69 744 55 095 Reduction of other liabilities 0 740 Increase in other receivables 0 400 Investments in equity, shares 683 -370 Investments in fixed assets 190 202 Investments in bonds 29 229 85 685 Total applied 99 846 141 752 Net cash flow 23 365 -32 145 Cash and cash equivalents as of 1.1 66 658 98 803 Cash and cash equivalents as of 31.12 90 023 66 658
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Cultura Sparebank Annual report 2018
7. Information Concerning Employees and Elected Representatives
At year end 2018, the bank had 16 permanent employees, which represents 15 full-time positions. Compensation to employees consists solely of a fixed salary. In addition to any remuneration for overtime, no form of variable remuneration is paid based on results obtained or any other basis. The CEO is granted an additional NOK 1 000 per month in order to cover expenses for electronic commu- nication (ECOM). The managerial group consisting of the CEO/General Manager, Deputy CEO/Assistant General Manager and Assistant General Manager/Head of Loan Department has no claim for overtime compensation as a result of a separate independent position. The General Manager’s salary is determined by the Board of Directors. In accordance with the cur- rent agreement, the General Manager has a claim to 6 months’ severance pay with a retirement benefit calculated from the first day of the following month following contract termination, if the Board makes use of its right to terminate the employment contract.
Salary and Pension Other remu- Loan Senior Executives remuneration premium neration* Chief Executive Officer, General Manager 854 60 15 227 Assistant General Manager, Deputy CEO, Head of IT and marketing 701 49 3 606 Assistant General Manager, Head of Loan Department (from 661 47 3 0 Total executives) 2 216 156 21 833 *ECOM and group life insurance
Salary and Pension Car allowance Loan Board of Directors remuneration premium Chair of the Board and member of the Risk and Audit Committee 179* 0 7 0 Deputy Chair of the Board and chair of the Risk and Audit Commit- 54 0 0 3 573 tee Board member 38 0 1 0 Board member (until 31.03.18) 11 0 0 0 Board member, member of the Risk and Audit Committee (until 49 0 0 0 31.05.18) Board member (from 01.04.18), member of the risk and audit 38 0 0 0 committee (from 01.06.18) Board member (for the employees) (until 31.03.18) 6 0 0 2 271 Board member (for the employees) (from 01.04.18) 17 0 4 0 Total board of directors 392 0 12 5 844
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Cultura Sparebank Annual report 2018
Salary and Pension Car allowance Loan Board of Trustees remuneration premium Chair of the Board of Trustees (until 22.03.18) 4 0 0 0 Member of the Board of Trustees and Chair of the Election Commit- 15 0 0 2 449 tee Member of the Board of Trustees and member of the Election 10 0 0 0 Committee Member of the Board of Trustees and member of the Election 10 0 0 1 000 Committee Member of the Board of Trustees and employee’s member of the 5 0 0 0 Election Committee Member of the Board of Trustees 0 0 0 200 Member of the Board of Trustees 0 0 0 606 Total board of trustees 44 0 0 4 255 *Remuneration to the chair of the boards includes a payment in arrears from 2017 of NOK 34 000.
Loans and guarantees to employees As of 31.12.2018, loans to employees totalled NOK 7 604 459, of which NOK 833 247 was to senior executives. No guarantees in favour of employees are effective. Loans to the management of the bank are granted on equal terms with other employees. Interest rate subsidies on loans to employ- ees amounted to NOK 54 256 in 2018.
Loans and guarantees to elected representatives No loans or guarantees have been granted to the chairpersons of the Board of Directors and the Board of Trustees respectively as of 31.12.2018. Loans to the members of the Board of Directors and members of the Board of Trustees equalled NOK 7 828 391.
Pension obligations to employees and trustees Cultura Bank has a collective pension scheme for its employees, which meets the requirements for mandatory occupational pensions. In 2014, the bank changed to a contribution-based pension ar- rangement through Storebrand. The bank has no pension obligations beyond the collective pension scheme. The bank’s pension contribution is 7 %, which is the maximum contribution within the scheme. In 2018 a total of NOK 727 176 was paid in pension contributions for the bank’s employees.
Remuneration to the statutory auditor
In NOK 2018 2017 Statutory audit 225 000 245 000 Preparation of income tax returns 20 000 25 000 Other consultation 17 350 11 875 Total remuneration to the statutory auditor 262 350 281 875
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Cultura Sparebank Annual report 2018
8. Taxes
Deferred taxes and deferred tax advantages are calculated based on temporary differences between accounting-based and taxation-based evaluations at year end. Tax-increasing and tax-reducing dif- ferences are evaluated inside the same time frame. Consequently tax-reducing differences material- izing at a future point in time cannot be offset against tax-increasing differences occurring in earlier periods. The calculation of future deferred taxes is based on a tax rate of 25 % as of 31.12.2018, and 25 % pr. 31.12.2017.
SPECIFICATION OF THE BASIS FOR TEMPORARILY DEFERRED TAXES/DEFERRED TAX ADVANTAGES In thousands of NOK 31.12.2018 31.12.2017 Fixed assets -461 -569 Pre-paid expenses - pensions 0 0 Bonds -120 -82 Losses carried forward 0 0 Total temporary differences -581 -651 Deferred tax (- deferred tax credits) 25 % -145 -162
TAX EXPENSE 2018 In thousands of NOK 31.12.2018 31.12.2017 Ordinary profit before tax 7 041 4 135 Permanent differences -800 27 Change in temporary differences -97 -178 Net taxable income 6 144 3 984
Payable tax 25 % 1 536 1 028 Capital tax 15 14 Total payable tax 1 551 1 042
Change in deferred tax 17 45 Excess reserve from previous year -4 -14 Total tax expense 1 564 1 073
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Cultura Sparebank Annual report 2018
9. Various Other Information
The net result as a percentage of total assets was 0,54 % in 2018.
SPECIFICATION OF FEE INCOME In thousands of NOK 2018 2017 Guarantee commission 230 188 Other commissions and fees 125 105 Money transfer and interbank transactions 7 493 7 359 Total commission and fee income from banking services 7 848 7 652
SPECIFICATION OF OTHER LIABILITIES In thousands of NOK 2018 2017 In settlement 2 240 1 664 Tax reservations due 422 403 Earmarked for interest on equity certificates 2 236 1 397 Earmarked for payable tax 1 551 1 042 Accounts payable 752 325 Other 318 314 Total other liabilities 7 519 5 145
SALARIES AND GENERAL ADMINISTRATIVE EXPENSES In thousands of NOK 2018 2017 Salary expenses to employees 8 580 8 559 Remuneration to the Board of Directors and Trustees 473 427 Pension contributions 727 698 Social security expenses 1 382 1 361 Financial activities tax 488 484 Other staff costs 193 215 Salaries, fees and other personnel expenses 11 843 11 744
IT costs 3 191 2 720 Office costs 862 788 Advertising charges 1 780 2 183 Other expenses 1 072 804 Administrative expenses 6 905 6 495
Depreciation of tangible and intangible fixed assets 1 407 1 469
Rent and rent-related expenses 1 461 1 495 Other operating expenses 1 278 1 101 Total operating expenses 2 739 2 596
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Cultura Sparebank Annual report 2018
The Norwegian Bank’s Guarantee Fund The Bank deposit insurance law prescribes a mandatory membership in the deposit insurance scheme for all banks in Norway. The insurance scheme will cover deposits up to NOK 2 million per depositor per member bank. A deposit is defined as any credit balance in favour of a named custom- er as well as a deposit receipt issued by a bank in favour of a named person. Deposits from other financial institutions are excluded from the scheme. Cultura Bank’s contribution to the scheme for 2018 is NOK 534 860.
2018 2017 Fee to the Norwegian deposit insurance 534 860 511 683
Cooperating banks in Europe
Andelskassen Merkur Denmark La NEF France Ekobanken Sweden Crédit Coopératif France
Freie Gemeinschaftsbank BCL Switzerland Banca Etica Italy
GLS Gemeinschaftsbank e.G. Germany Triodos Bank Netherlands
Cultura Bank furthermore contributes in international cooperation through memberships in the or- ganisations Fédération Européenne des Banques Etiques et Alternatives (FEBEA), Global Alliance for Banking on Values (GABV) and Institute for Social Banking (ISB).
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BDO AS Klæbuveien 127B 7031 Trondheim
Uavhengig revisors beretning Til forstanderskapet i Cultura Sparebank
Uttalelse om revisjonen av årsregnskapet
Konklusjon Vi har revidert Cultura Sparebank' årsregnskap.
Årsregnskapet består av: Etter vår mening: · Balanse per 31. desember 2018 Er årsregnskapet avgitt i samsvar med lov og · Resultatregnskap for 2018 forskrifter og gir et rettvisende bilde av · Kontantstrømoppstilling for selskapets finansielle stilling per 31. desember regnskapsåret avsluttet per 2018, og av dets resultater og kontantstrømmer 31. desember 2018 for regnskapsåret avsluttet per denne datoen i · Noter til årsregnskapet, herunder et samsvar med regnskapslovens regler og god sammendrag av viktige regnskapsskikk i Norge. regnskapsprinsipper.
Grunnlag for konklusjonen Vi har gjennomført revisjonen i samsvar med lov, forskrift og god revisjonsskikk i Norge, herunder de internasjonale revisjonsstandardene International Standards on Auditing (ISA-ene). Våre oppgaver og plikter i henhold til disse standardene er beskrevet i Revisors oppgaver og plikter ved revisjon av årsregnskapet. Vi er uavhengige av selskapet slik det kreves i lov og forskrift, og har overholdt våre øvrige etiske forpliktelser i samsvar med disse kravene. Etter vår oppfatning er innhentet revisjonsbevis tilstrekkelig og hensiktsmessig som grunnlag for vår konklusjon.
Annen informasjon Ledelsen er ansvarlig for annen informasjon. Annen informasjon består av årsberetningen.
Vår uttalelse om revisjonen av årsregnskapet dekker ikke annen informasjon, og vi attesterer ikke den andre informasjonen.
I forbindelse med revisjonen av årsregnskapet er det vår oppgave å lese annen informasjon med det formål å vurdere hvorvidt det foreligger vesentlig inkonsistens mellom annen informasjon og årsregnskapet, kunnskap vi har opparbeidet oss under revisjonen, eller hvorvidt den tilsynelatende inneholder vesentlig feilinformasjon.
Dersom vi konkluderer med at annen informasjonen inneholder vesentlig feilinformasjon er vi pålagt å rapportere det. Vi har ingenting å rapportere i så henseende.
Styret og daglig leders ansvar for årsregnskapet Styret og daglig leder (ledelsen) er ansvarlig for å utarbeide årsregnskapet i samsvar med lov og forskrifter, herunder for at det gir et rettvisende bilde i samsvar med regnskapslovens regler og god regnskapsskikk i Norge. Ledelsen er også ansvarlig for slik intern kontroll som den finner nødvendig
Uavhengig revisors beretning Cultura Sparebank - 2018 side 1 av 2 for å kunne utarbeide et årsregnskap som ikke inneholder vesentlig feilinformasjon, verken som følge av misligheter eller utilsiktede feil.
Ved utarbeidelsen av årsregnskapet må ledelsen ta standpunkt til selskapets evne til fortsatt drift og opplyse om forhold av betydning for fortsatt drift. Forutsetningen om fortsatt drift skal legges til grunn for årsregnskapet så lenge det ikke er sannsynlig at virksomheten vil bli avviklet.
Revisors oppgaver og plikter ved revisjonen av årsregnskapet Vårt mål er å oppnå betryggende sikkerhet for at årsregnskapet som helhet ikke inneholder vesentlig feilinformasjon, verken som følge av misligheter eller utilsiktede feil, og å avgi en revisjonsberetning som inneholder vår konklusjon. Betryggende sikkerhet er en høy grad av sikkerhet, men ingen garanti for at en revisjon utført i samsvar med lov, forskrift og god revisjonsskikk i Norge, herunder ISA-ene, alltid vil avdekke vesentlig feilinformasjon som eksisterer. Feilinformasjon kan oppstå som følge av misligheter eller utilsiktede feil. Feilinformasjon blir vurdert som vesentlig dersom den enkeltvis eller samlet med rimelighet kan forventes å påvirke økonomiske beslutninger som brukerne foretar basert på årsregnskapet.
For videre beskrivelse av revisors oppgaver og plikter vises det til: https://revisorforeningen.no/revisjonsberetninger
Uttalelse om øvrige lovmessige krav
Konklusjon om årsberetningen Basert på vår revisjon av årsregnskapet som beskrevet ovenfor, mener vi at opplysningene i årsberetningen om årsregnskapet, forutsetningen om fortsatt drift og forslaget til anvendelse av overskuddet er konsistente med årsregnskapet og i samsvar med lov og forskrifter.
Konklusjon om registrering og dokumentasjon Basert på vår revisjon av årsregnskapet som beskrevet ovenfor, og kontrollhandlinger vi har funnet nødvendig i henhold til internasjonal standard for attestasjonsoppdrag (ISAE) 3000 «Attestasjonsoppdrag som ikke er revisjon eller forenklet revisorkontroll av historisk finansiell informasjon», mener vi at ledelsen har oppfylt sin plikt til å sørge for ordentlig og oversiktlig registrering og dokumentasjon av selskapets regnskapsopplysninger i samsvar med lov og god bokføringsskikk i Norge.
Trondheim, 14. mars 2019 BDO AS
John Christian Løvaas statsautorisert revisor
Uavhengig revisors beretning Cultura Sparebank - 2018 side 2 av 2
BDO AS, et norsk aksjeselskap, er deltaker i BDO International Limited, et engelsk selskap med begrenset ansvar, og er en del av det internasjonale nettverket BDO, som består av uavhengige selskaper i de enkelte land. Foretaksregisteret: NO 993 606 650 MVA. Cultura Sparebank Annual report 2018
Audit Report Translation INDEPENDENT AUDITOR’S REPORT BY BDO
To the general assembly of Cultura Sparebank
Report on the audit of the financial statements
Conclusion
We have audited the annual report of Cultura Sparebank.
The annual report comprises of: In our opinion: • Balance sheet as of December 31st 2018 The annual accounts have been submitted in ac- • Profit and loss accounts for 2018 cordance with laws and regulations and that • Cash flow analysis for the accounting these offer a correct picture of the bank’s finan- st year ended by December 31st 2018 cial position as of December 31 2018, including • Notes pertaining to the accounts, results and cash flow statements for the account- including a summary of significant ing year closed at this date in accordance with the account policies. accounting laws and good accounting practise in Norway.
Basis for our conclusions
We have conducted our audit in accordance with the laws, regulations, and auditing standards and practices generally accepted in Norway, including the International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of this report. We are fully independent of the company as required by laws and regulations, and complied with our ethical obligations in accordance with these requirements. We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our conclusion.
Other information
The management of the audited company is responsible for other information. Other information includes the annual report.
Our conclusion on the financial statements does not cover the other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other infor- mation, and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
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Cultura Sparebank Annual report 2018
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Board and CEO for the financial statements
The Board of Directors and the CEO are responsible for the preparation and fair presentation of the financial statements in accordance with laws and regulations, and to make sure that these give a true picture of the bank’s financial situation in accordance with the accounting law and good accounting practise in Norway. Furthermore, management is responsible for internal control measures neces- sary to prepare financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements management is responsible for assessing the compa- ny’s ability to continue as a going concern, disclosing, as applicable, matters related to the going con- cern. The going concern of the company is used as a basis of accounting, unless management intends to liquidate the company or cease operations.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our conclusion. Reasonable assurance is a high level of assurance, but is not a guaran- tee that an audit conducted in accordance with law, regulation and good auditing practice in Norway, including the ISAs, will always detect a material misstatement when it exists. Misstatements can oc- cur as a result of fraud or accidental errors. Misinformation is considered material if it can be ex- pected to influence, individually or in the aggregate, the economic decisions that users make based on the financial statements.
For a further description of the auditor’s tasks and obligations reference is made to: https://revisorforeningen.no/revisjonsberetninger.
Report on other legal requirements
Conclusion on the annual report
Based on our audit of the financial statements as described above, it is our opinion that the infor- mation in the annual report concerning the annual accounts, the assumption of a going concern and the proposal for allocation of the net profit is consistent with the annual accounts and in accordance with the law and regulations.
Conclusion on registration and documentation
Based on our audit of the financial statements as described above and control procedures we have deemed necessary in accordance with the International Standard on Assurance Engagements (ISAE)
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Cultura Sparebank Annual report 2018
3000 “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”, it is our opinion that management has fulfilled its duty to ensure that the company’s accounting infor- mation is properly recorded and documented as required by law and bookkeeping standards and practices accepted in Norway.
Trondheim, 14. March 2019
BDO AS
John Christian Løvaas
State Authorised Public Accountant
(This translation from Norwegian has been made for information purposes only)
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Cultura Sparebank Annual report 2018
Employees and elected representatives 2018 The Board of Trustees in 2018 Name Function Representing Lars Hektoen Chair Depositors Ove Jakobsen Deputy chair Depositors Frank Schmiemann Member Equity certificates Elizabeth von Hanno Brockfield Member Equity certificates Åsa Jeppsson Member Equity certificates Anne-Kristin Løes Member Equity certificates Morten Ingvaldsen Deputy member Equity certificates Johannes Brinkmann Member Depositors Elizabeth Wirsching Member Depositors Idun Leinaas Deputy member Depositors Stian Torstenson Member Employees Rune Horne Member Employees Jannike Østervold Member Employees Mathias Bertram (until 31.07.18) Deputy member Employees Kjersti Aspheim Member City of Oslo Christina Solli Ektvedt Deputy member City of Oslo
The Board of Directors in 2018 Maria Bjune Chair to the Board Christian Dubrau Deputy chair to the Board Bjarne Hjertholm (for employees) Board member Morten Johannessen Board member Øyvind Vestre Board member Randi Almås Welhaven Board member Ebba Boye Deputy member Alf Howlid Deputy member Camilla Gjetnes (for employees) Deputy member
Employees in Cultura Bank in 2018 Christina Andersson Compliance, AML Torstein Dyrnes Chief accountant and risk controller Camilla Gjetnes Head of customer services Andreas Haugerud Customer services Bjarne Hjertholm Loans Rune Horne Loans Thomas Emil Lie Karlsen Customer services Annette Larssen Customer services Kjell Fredrik Løvold Chief executive officer Alice Nyamogo Accounting and operations Christine Praamsma Accounting and operations Kari Schage Assistant General Manager, Head of loan department Gro Sissel Taraldrud Loans Stian Torstenson IT and marketing Mie Tørmoen Customer services Jannike Østervold Deputy CEO, Assistant General Manager, IT and marketing
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Cultura Sparebank Annual report 2018
Key Figures
In thousands of NOK 2018 2017 2016 2015 2014 Solidity
Common equity tier 1 capital ratio (%) 19,25 19,94 18,27 16,18 14,62 Tier 1 capital ratio (%) 22,52 19,94 18,27 16,18 14,62 Total capital ratio (%) 22,52 23,50 22,07 20,25 18,49 Risk weighted balance sheet total 459 037 421 403 393 601 366 040 384 188 Leverage ratio (%) 9,54 8,36 8,35 7,34 7,73 Total assets 1 066 368 944 796 836 692 755 470 657 475 Average total assets 1 005 582 890 744 796 081 706 473 606 005 Equity capital 89 836 86 747 76 522 64 036 58 558
Liquidity
Liquidity Coverage Ratio (LCR) 322 357 361 334 191 Net Stable Funding Ratio (NSFR) 172 171 174 187 166
Deposit and loan development
Loans 635 509 565 764 510 669 459 671 418 483 Yearly loan growth (%) 12,3 10,8 11,1 9,8 14,8
Deposits 951 602 835 509 737 307 671 165 577 594 Yearly deposit growth (%) 13,9 13,3 9,9 16,2 20,6
Deposit coverage ratio (%) 150 148 144 146 138
Environment
CO2 emission (in tons) 11,0 10,4 10,5 13,0 15,0
Profitability
Profit after tax 5 477 3 062 5 526 1 629 2 755 Return on total assets3 0,55 0,34 0,69 0,23 0,45 Return on equity4 6,20 3,75 7,86 2,66 4,83 Net interest income5 2,21 2,23 2,37 2,87 3,19 Cost/income % 79,68 85,64 82,80 89,91 82,65 Operating expenses in % of average total assets 2,28 2,50 2,59 3,07 3,25
3 Return on total assets: net profit as a percentage of average total assets 4 Return on equity: net profit as a percentage of average total equity 5 Net interest income: net interest income as a percentage of average total assets
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Cultura Sparebank Annual report 2018
Cultura Sparebank Postbox 6800 St. Olavs Plass NO-0130 Oslo, Norway Office: Holbergs gate 1, Oslo Telephone: +47 22 99 51 99 [email protected] Org.nr. 977 041 244 www.cultura.no48